2018 (1) TMI 287 - AT - Income Tax

Tribunal upholds CIT(A)-1's decision on PF contribution disallowance. Appellant's challenge dismissed based on jurisdictional High Court ruling.

The tribunal upheld the decision of the CIT(A)-1, Vadodara, regarding the disallowance of Rs. 1,87,869 on account of late payment of employees' ... Disallowance on late payment of employees contribution to PF - Held that:- The issue is squarely covered against the assessee by Hon’ble jurisdictional High Court’s judgment in the case of CIT vs. Gujarat State Road Transport Corporation (2014 (1) TMI 502 - GUJARAT HIGH COURT), wherein it is categorically held that in the case of delayed deposit of employees contribution to PF, the same will not be deductable in computing income under section 28 of the Act.The law so laid down by the Hon’ble jurisdictional High Court is binding on us. The mere fact that an appeal against the said decision is pending before the Hon’ble Supreme Court does not dilute binding nature of this judicial precedent. - Decided against assessee. Issues:Challenge to correctness of order on disallowance of late payment of employees' PF contribution.Analysis:The appellant challenged the correctness of the order dated August 25, 2015, passed by the CIT(A)-1, Vadodara, regarding the assessment under section 143(3) of the Income-tax Act, 1961, for the assessment year 2012-13. The specific ground of challenge was the disallowance of Rs. 1,87,869 on account of late payment of employees' contribution to PF. The appellant contended that the disallowance was erroneous and should be deleted. The appellant relied on various legal precedents and recent decisions to support their case, including the judgment of the Hon'ble Rajasthan High Court in a similar matter. The appellant presented arguments citing cases such as DCIT vs. Eastern Power Distribution Company of AP Ltd., Dialogic Network (India) (P) Ltd vs. DCIT, Sagun Foundry (P) Ltd vs. CIT, and others, where decisions were in favor of the assessee. The appellant urged the tribunal to consider these arguments and decide the issue accordingly.The Departmental Representative argued that the issue was conclusively settled against the appellant by the judgment of the Hon'ble jurisdictional High Court in the case of CIT vs. Gujarat State Road Transport Corporation. It was emphasized that the law laid down by the jurisdictional High Court was binding and that the pendency of an appeal before the Supreme Court did not diminish the binding nature of the precedent. The Departmental Representative also highlighted that the dismissal of the Special Leave Petition (SLP) in another case did not establish a binding precedent as per established legal principles. It was further argued that decisions of non-jurisdictional High Courts and co-ordinate benches could not override the decisions of the jurisdictional High Court. Consequently, the Departmental Representative found no legal merit in the appellant's submissions and recommended dismissing the appellant's grievance based on the binding judgment of the jurisdictional High Court.In the final judgment, the tribunal dismissed the appeal of the assessee, upholding the decision of the CIT(A)-1, Vadodara, regarding the disallowance of Rs. 1,87,869 on account of late payment of employees' contribution to PF. The tribunal pronounced the decision on January 2, 2018, in open court, based on the arguments presented by both parties and the legal precedents cited.